The OECD claims that the crypto market poses a “major danger” in terms of tax transparency, arguing that any gains will be lost unless further measures are put in place.
The Organisation for Economic Cooperation and Development (OECD) has proposed new criteria for reporting crypto transactions and identifying users in order to improve transparency for international tax authorities.
The OECD published a public consultation document on Tuesday that included a suggestion to require crypto service providers to better identify users and report on certain transactions. Tax authorities do not have “sufficient visibility” for transactions involving crypto assets, according to the organisation, because of present reporting rules. The OECD claims that the crypto market poses a “major danger” in terms of tax transparency, arguing that any gains will be lost unless further measures are put in place.
Individuals and enterprises already operating in crypto services, such as exchanges, retail transactions, and transferring tokens, would have 12 months from the laws’ implementation date to comply with the reporting requirements, according to the plan. Members of the public were requested to comment on whether crypto assets including nonfungible tokens would be covered by the proposal, as well as tax reporting laws and “due diligence” methods for collecting information from persons engaged in crypto transactions for both hot and cold wallets.
“Unlike traditional financial products, crypto-assets can be transferred and retained without the involvement of traditional financial intermediaries, and without any central administrator having complete visibility over either transactions or crypto-asset holdings,” according to a report summary. “As a result, crypto-assets may be used to sabotage existing international tax transparency measures.”
Today the OECD released a public consultation document concerning a new global tax transparency framework to provide for the reporting and exchange of information with respect to crypto-assets. https://t.co/1qKFyXWOQb
— Amy Lee Rosen (@amyleerosen) March 22, 2022
The idea will be up for public feedback through April 29, with a meeting scheduled for the end of May. The OECD said it plans to report on the new reporting rules at the G20 conference in Bali in October.
Residents of the United States are in the midst of tax season, with many having until April 18 to file their taxes. Many U.S.-based centralised exchanges provide the Internal Revenue Service paperwork showing transactions from the previous year, despite the fact that countries’ tax authorities often have differing reporting requirements for HODLing or transferring crypto assets. Exchanges of tokens or crypto into cash are frequently reported as capital gains or losses by taxpayers.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.